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New Studies on Ecommerce by CUTS and UNCTAD Study on Ecommerce in Lesser Developed Countries (LDCs) During COVID Highlight Challenges

The international policy research body, CUTS, has just produced a very readable report on ecommerce in COVID times – and UNCTAD released a study on ecommerce mainly in the Lesser Developed Countries (LDCs) UNCTAD study. Interestingly, these studies do not align. UNCTAD’s research suggests that many ecommerce businesses have seen a slump in sales. The Report admits that it had found it hard to collect data in the sample of 23 LDC countries (mainly African and Asian), but the researchers point to a stark divide between the pandemic’s impact on different actors in the digital economy. According to data collected between March and July 2020 from over 250 companies, most of which have less than 10 employees, 58% of businesses selling their own products or services online recorded a drop in monthly revenue, whereas about 64% of third-party marketplaces have seen a spike in sales. Two-thirds reported rising operational costs since the outbreak, and 44% expect to cut their workforce. The study reports a notable increase in digital financial services in the nations surveyed as consumers tried to limit exposure to the virus while paying for food, medicine, health and hygiene products and other goods. 64% of the ecommerce businesses that took part in the UNCTAD study reported an uptake in payments primarily through mobile money, followed by online and mobile banking, credit cards and other digital payment platforms, but COD (cash-on-delivery) still remains by far the preferred form of payment for ecommerce transactions in the LDCs. The study highlights the range of challenges ecommerce businesses have faced during the pandemic, notably disrupted supply chains, logistical problems arising from restrictions on the movement of people, and high broadband costs (in LDCs, only 19% of the population use the Internet and only 40% have access to a high-speed mobile broadband network). Nearly half the participants said governments had not prioritized the ecommerce sector sufficiently in their COVID response efforts and recovery plans. The pandemic has further exposed gaps in policy areas central to improving digital readiness in developing countries, such as weak ecommerce regulatory frameworks and bottlenecks in financing digital entrepreneurs and start-ups. But the participants did acknowledge that some measures taken by the public and private sectors have helped lower hurdles for businesses and consumers to use ecommerce services, including public awareness campaigns on the benefits of ecommerce, more digital skills training opportunities, and reduced e-payment transaction costs.

The Netherlands has given UNCTAD a grant of $1.5 million to assist Africa-wide ambitions to benefit from ecommerce and provide concrete support to LDCs.

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Alastair Tempest

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